BP America Inc. has been hit with a $5.2 million civil penalty for “false, inaccurate, or misleading” energy-production reports about wells on Southern Ute tribal lands in southwestern Colorado.
The reporting problems ran from 2007 to May.
“It is simply unacceptable for companies to repeatedly misreport production,” Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said in a statement.
The bureau — formerly the Minerals Management Service — is responsible for collecting energy royalties on all public lands.
“We are committed to collecting every dollar due from energy production,” Bromwich said.
The problems created about $200,000 in underreporting in the $1.1 billion BP pays annually in royalties from operations on land — save for Alaska — and in the Gulf of Mexico, according to company spokesman Curtis Thomas.
BP was “caught off guard by the announcement and the fine,” Thomas said.
“We’ve had frequent contact with the federal government and the tribe, and the problems have been corrected,” Thomas said.
The bureau said it did not know if there was unreporting of royalty payments.
The problem was first discovered in 2007 by Southern Ute tribal auditors, who work in conjunction with the bureau’s Minerals Revenue Management program. The tribal auditors brought the issue to BP’s attention.
In filing monthly royalty reports, a company must provide production, market prices and the location of the producing wells. BP America had problems accurately filing this information, according to Pat Echart, a bureau spokesman.
The reporting problems were finally resolved May 28, Echart said.
“I appreciate the MRM’s recognition of its trust responsibility to the tribe by assessing civil penalties,” Southern Ute Tribal Chairman Matthew J. Box said.
BP is one of the top natural-gas producers in Colorado, producing 2.3 billion cubic feet of gas in 2009, according to Colorado Oil and Gas Conservation Commission data. About a third of BP’s total production in 2009 came from 400 wells on Ute land, the oil-and-gas-commission data show.
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com
